Small business relief is a corporate tax election, not an exemption you apply for: if your UAE revenue stayed at or below AED 3 million for the tax period — and the one before it — you can elect in your tax return to be treated as having no taxable income, which means 0% corporate tax for that period. The election window is bounded: it only exists for tax periods ending on or before 31 December 2026.
TL;DR
- Eligibility requires UAE Resident Person status and revenue of AED 3,000,000 or less in BOTH the relevant tax period and the previous one (Corporate Tax Law Article 21; Ministerial Decision No. 73 of 2023; FTA Small Business Relief topic page, checked 3 September 2026).
- The relief applies only to tax periods ending on or before 31 December 2026 — a later decision will set what comes after.
- The election is made in the tax return for the period; no separate application.
- Trade-off: tax losses incurred in a period where you elected small business relief cannot be carried forward — profitable small businesses usually elect, loss-making ones should model both ways.
- Qualifying Free Zone Persons and members of Multinational Enterprises Groups cannot elect.
What electing actually does
Electing small business relief means the law treats you as having no taxable income for that period — no 9% on anything, no 0% band arithmetic to run. What it does not do is remove your other obligations: registration, filing a return, and keeping records all still apply.
The two conditions
1. You are a UAE Resident Person. Companies incorporated in the UAE, foreign entities effectively managed from the UAE, and natural persons conducting business in the UAE all qualify as residents. Branches of foreign companies do not — the foreign head entity holds the residence, not the branch.
2. Revenue is AED 3 million or less in both periods. Revenue is determined per the accounting standards you use, and the test is retroactive in one respect: exceed AED 3 million in the previous period and you are out for the current one too, even if this year's revenue collapsed. The FTA's own worked example: a business with AED 4.3 million revenue in 2025 and AED 1.9 million in 2026 is NOT eligible for 2026.
Who cannot elect
- Qualifying Free Zone Persons — a QFZP already earns the 0% rate on qualifying income and is excluded from the election.
- Members of Multinational Enterprises Groups — groups with consolidated global revenue above AED 3.15 billion.
- Non-resident persons and their UAE branches.
Decision table: elect or not
| Your situation | Elect? | Why |
|---|---|---|
| Profitable, revenue under AED 3m, both periods | Yes | 0% beats any alternative; compliance cost drops |
| Loss-making this period, revenue under AED 3m | Model it first | Election zeroes income but forfeits carrying forward this period's losses |
| Revenue over AED 3m in the previous period | Not eligible | The test is both-periods, regardless of the current year |
| Free zone company with qualifying income | Not eligible (as QFZP) | QFZP regime already delivers 0% on qualifying income |
| Part of a large multinational group | Not eligible | MNE Group members are excluded |
| Expecting revenue to cross AED 3m before end-2026 | Track monthly | Crossing the line in any period ends eligibility from that period |
How to elect
- Register for corporate tax on EmaraTax if you have not — see the corporate tax registration guide. Unregistered persons pay an AED 10,000 penalty for late registration regardless of relief.
- File the tax return for the period and tick the small business relief election in the return itself.
- Keep the books that prove it — revenue under the ceiling, per your accounting standards, for both periods.
Sole establishment owners and freelancers conducting business qualify as resident natural persons — the freelancer corporate tax guide explains when the AED 1 million turnover registration duty applies alongside relief. Online sellers should read relief alongside their specific obligations in the e-commerce corporate tax guide.
What happens after 31 December 2026
The AED 3 million ceiling was set to apply to tax periods ending on or before 31 December 2026, with the government signalling it would evaluate the scheme after seeing its effect. A tax period ending in 2027 without a new decision falls outside the relief — model 9% above the AED 375,000 threshold on the excess and treat the election as a benefit with a stated expiry, not a permanent feature.
Elect correctly, model the trade-off
Finanshels runs the election math against your actual books — relief, loss carry-forwards and the 2026 cliff — before you file.
FAQ
What is the revenue threshold for small business relief in the UAE?
AED 3,000,000 or less in the relevant tax period AND the previous tax period, per Ministerial Decision No. 73 of 2023. Revenue is determined under your applicable accounting standards.
How long will small business relief be available?
For tax periods ending on or before 31 December 2026. Tax periods ending after that date are outside the current decision until a new one is issued.
Do sole establishments and freelancers qualify?
Yes — resident natural persons conducting a business in the UAE can elect, subject to the same revenue test. Registration duties under the corporate tax rules for natural persons still apply.
Can a free zone company elect for small business relief?
No — a Qualifying Free Zone Person is excluded from the relief, though a QFZP generally already enjoys 0% on qualifying income. A free zone company that is not a QFZP (for example one failing the substance tests) may be able to elect.
What happens to my tax losses if I elect?
Tax losses incurred in a tax period where you elected small business relief cannot be carried forward to later periods — the single most common reason a loss-making business should model the election before filing.
Is the election permanent?
No — it is made per tax period in the return. You can elect in one period and not the next, provided you still meet the conditions each time.
Do I still need to register and file if I elect?
Yes. Small business relief removes taxable income for the elected period; it does not remove corporate tax registration, return filing or record-keeping obligations.
My revenue was over AED 3m last year but under this year — can I elect now?
No. The FTA's worked example confirms the previous period's revenue counts: over the ceiling in the prior period means ineligible for the current one.
